9. Natural gas sales and purchases (continued)
For the Nine Months Ended December 31 2016 2015 Gas Gas
Commodity Marketing Total
(millions)
Commodity Marketing Total
Natural gas sales Natural gas sales to commodity customers
$
115
$
-
$
115
$
129
$
-
$
129
Realized on natural gas derivative instruments
10
113
123
31
116
147
Change in fair value of natural gas derivative instruments
-
(18)
(18)
(1)
(10)
(11)
125
95
220
159
106
265
Natural gas purchases Realized on natural gas derivative instruments
(110)
(102)
(212)
(139)
(101)
(240)
Change in fair value of natural gas derivative instruments Change in revaluation of natural gas in storage to net realizable value
82
6
88
7
-
7
-
27
27
-
(1)
(1)
(28)
(69)
(97)
(132)
(102)
(234)
$
97
$
26
$
123
$
27
$
4
$
31
10. Net change in non-cash working capital related to operations
For the Nine Months Ended December 31
(millions)
2016
2015
$
(10) (21)
Trade and other receivables
$
42
Natural gas in storage held for resale
(32)
(2)
Inventory of supplies
-
16
Trade and other payables
31
(3)
Deferred revenue
(14)
$
(20)
$
27
11. Financial risk management
Through the normal course of business, the Corporation has exposure to market risk (natural gas price risk, interest rate risk, and foreign currency risk), liquidity risk, and credit risk related to its financial and derivative instruments. The Board of Directors, through the Audit and Finance Committee, has the overall responsibility for the establishment and oversight of the Corporation's risk management efforts. The Corporation’s risk management policies and strategies, approved by the Board of Directors and reviewed regularly by the Audit and Finance Committee, provide the framework within which the Corporation may use financial and derivative instruments to manage its risks. The Corporation’s significant risk management policies include the Corporate Derivatives Policy, the Commodity Risk Management Policy, the Corporate Debt and Interest Rate Risk Management Policy, the Foreign Currency Risk Management Policy and the Corporate Credit Risk Management Policy. The objectives, policies, and processes for managing risk were consistent with the prior period. The significant risks in relation to financial instruments that impact the Corporation are discussed below.
a. Natural gas price risk
The Corporation purchases natural gas for resale to its customers. While natural gas is purchased at fluctuating market prices, the Corporation sells natural gas to customers at a fixed commodity rate that is reviewed semi- annually. As part of its natural gas price risk management, the Corporation uses derivative instruments to manage the price of the natural gas it buys. The Corporation’s objective is to reduce the volatility of natural gas prices and to have rates that are competitive to other utilities. The Corporation also purchases and sells natural gas in the open market to generate incremental income through its gas marketing activities.
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2016-17 THIRD QUARTER REPORT
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